Sell, Hold or Resyndicate: What to do at the End of the Housing Tax Credit Project
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Understand the tax credit options both when initially structuring a project and when evaluating what to do in year 15.Owners of tax credit projects are faced with numerous options at the end of the tax credit compliance period. They can sell the project subject to the use restrictions, attempt to have the use restrictions removed by offering the project for sale pursuant to qualified contract, continue to own the project or attempt to get new low-income housing tax credits. These decisions can also impact lenders, investors and governmental entities involved with the project. An owner's options may be limited by decisions made when the project is developed. Consequently, the parties involved in a low-income housing tax credit project and their counsel need to understand the options both when initially structuring a project and when evaluating what to do in year 15. This information will cover the impact of recent tax law changes, including changes in depreciation, interest deductions, and unique opportunities for projects in Qualified Opportunity Zones. Failure to properly structure the project initially and failure to structure the deal at the end of the compliance period can have disatrous tax consequences. We will address the options, the potential tax consequences and how to evaluate what is the best option for a project.
AuthorsAngela M. Christy, Faegre Baker Daniels LLP
What Documents and Facts Do You Need to Do to Evaluate Options in Year 15?
What Are Some of the Tax Issues That Need to Be Considered?
• Capital Accounts and Exit Tax
• Debt Modification
• Sell Subject to Existing Restrictions
• Sell Pursuant to Qualified Contracts
• Purchase Property at Fair Market Value
• Purchase Property Subject to ROFR Under 42(i)(7)
• Acquire Limited Partnership Interest
Structuring the Transaction to Maximize Options
• Balancing Losses and Investor Return
• Impact of Tax Cuts and Jobs Act on Options
• Debt Structuring
• Elections Made in Tax Credit Application, Carryover, and 8609
• Terms of LURA
• Use of Qualified Opportunity Zone to Minimize Exit Tax Issues